UK VAT Report Begins
The UK authorities have launched a consultation on VAT as it relates to the sharing economy in the UK.
In a new call for evidence on the need for reform of the UK’s VAT rules, the Government noted that the sharing economy (covering services such as ride-sharing and temporary accommodation) creates huge opportunities for the UK economy but also potentially presents certain challenges to the VAT tax base.
Specifically, the call for evidence noted the potential for long-term erosion of the VAT base due to consumers shifting their consumption to the sharing economy. Without reform, this erosion will take place, for instance, because individual suppliers are typically not required to charge and remit VAT because their turnover falls under the VAT registration threshold, the paper said. In addition, as they are not required to register for VAT, their payments of commission fees to digital platforms situated overseas without a fixed place of establishment in the UK will not be caught by the rules for business-to-business supplies of services, under which VAT would be due in the UK under a reverse charge.
The report also looks at problems regarding ensuring that service providers comply with VAT rules, and at compliance by digital platforms, especially those based offshore. Input is being sought until March 3, 2021.
For more information on this, and other topical international tax matters, please visit: https://www.cchgroup.com/roles/corporations/international-solutions/research/global-tax-weekly-a-closer-look